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Nokia, Is It Sentiment Manipulation or Grassroots Love?

A quick note on some potential astroturfing seen here on Forbes, Motley Fool and Barron’s over the past few days. Astroturfing is the practice of organized comments on social media sites, detectable largely by identical text.

In this case, the astroturfing relates to Nokia and involves extensive comments (CLARIFICATION: extensive identical comments, many coming from the same IP address in a form that sometimes is called astroturfing, the practice of creating an appearance of grassroots support) in favor of the Finish company and its products. See the texts below and see this article for NPR coverage of political astroturfing.

Identical comments appeared on a number of sites over the past five days (The Times of India is another) all with identical text but with different commentator names. In the case of the comments on my post, the different names also come from the same domestic IP address.

I don’t have time to research it exhaustively but there are some examples below.

The purpose could be benign. A few grass roots followers who want to show their support for Nokia. Or it could be aimed at influencing overall sentiment, though that would take a large effort. As it is the comments appear mostly on investment related sites.

Beside Verizon news, which is of course very important for North America markets and Wall Street, for example in China regarding Gartner´s report, WP phone sell is going to pass 10 million units worldwide this quarter alone. In Finland, with national TV interview, even though CEO Stephen Elop did not say how many units of Lumia 920 have been sold, but he thanked shareholders and people who have supported Nokia through difficult times. He also said all the hard work has been worth it and the company is starting to see ray of light and the effort has been now fruitful.

Nokia is a stock to own with great upside opportunity right now, I have to say there are many more factors that have driven Nokia lately and into the future. Beside Verizon news, which is of course very important for North America markets and Wall Street, for example in China regarding Gartner´s report, WP phone sell is going to pass 10 million units worldwide this quarter alone. In Finland, with national TV interview, even though CEO Stephen Elop did not say how many units of Lumia 920 have been sold, but he thanked shareholders and people who have supported Nokia through difficult times. He also said all the hard work has been worth it and the company is starting to see ray of light and the effort has been now fruitful.

Nokia did announce a couple of months ago (when asked why it bought Norway´s Smarterphone but has not used the OS) that Nokia bought Smarterphone because of the company´s expertise, in order to develop Nokia´s feature phones which are going to be kind of half smartphones right now, e.g. the newest Asha 205 and Asha 206, in which there are features like Facebook, Twitter etc and internet access to thousands of Nokia´s most popular apps.

Either Nokia has integrated Smarterphone into S40, we don´t know, but the fact is Nokia´s feature phones have become really smarter!

Nokia did announce a couple of months ago (when asked why it bought Norway´s Smarterphone but has not used the OS) that Nokia bought Smarterphone because of the company´s expertise, in order to develop Nokia´s feature phones which are going to be kind of half smartphones right now, e.g. the newest Asha 205 and Asha 206, in which there are features like Facebook, Twitter etc and internet access to thousands of Nokia´s most popular apps.

Either Nokia has integrated Smarterphone into S40, we don´t know, but the fact is Nokia´s feature phones have become really smarter!

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Nokia did announce a couple of months ago (when asked why it bought Norway´s Smarterphone but has not used the OS) that Nokia bought Smarterphone because of the company´s expertise, in order to develop Nokia´s feature phones which are going to be kind of half smartphones right now, e.g. the newest Asha 205 and Asha 206, in which there are features like Facebook, Twitter etc and internet access to thousands of Nokia´s most popular apps.

Either Nokia has integrated Smarterphone into S40, we don´t know, but the fact is Nokia´s feature phones have become really smarter!

Apart from the features I mentioned above in the new Asha phones,

Nokia has already brought an app called Nearby (which is almost the same as Lumia´s City Lens) into Asha phone line!

In addition to all these, Nokia has 40 most popular games of the world in these Asha phones for free. And Asha 205, 206 is only $60 without any contract at all. And Nokia´s Asha phones are profitable, that is one really important thing to keep in mind, because almost 2/3 of the world´s population is still using a featurephone!

As Nokia has said, with these Asha phones Nokia is targeting the next billion people to reach internet. There is still a huge opportunity out there which even Android can not target (because cheapest android right now is above $100 and Asha is only $60), not to mention iOS!

Asha phones were and have been profitable.

Actually, all the other 4 Nokia´s business divisions (Navteq, NSN, intellectual property rights and feature phones) were profitable in 3Q12, except smartphone division. And the total EPS was -0.07 euro per share, while the consensus was -0.11 euro per share. In other words, Nokia has beaten expectations and estimations (and to be exact, this has already happened in the last two quarters, with beating consensus. Those are ones of the most important reasons why NOK stock has jumped from its lowest this much)! The news of the last two weeks are only part of the whole reason.

And at this price, NOK is still undervalued!

Morningstar´s analysis for the whole Nokia:

Estimated price: intellectual properties over 1 euro per share (Motorola´s patent portfolio was worth about $5.5 billion); other business parts (smartphones, featurephones, NSN) at least over 1.50 euro per share.

And NAVTEQ´s price not included (Nokia bought NAVTEQ with 5.7 billion euro). All in all, even in this case, Nokia share price would be at least over 2.50 euro, excluded NAVTEQ! And Nokia´s net cash is now 3.6 billion euros.

In other words, the sum of parts of Nokia and net cash are worth much more than its market cap now, which means NOK share is right now heavily undervalued.

Nokia Is a Wide-Ranging Company and The Stock is With Hidden Value Right Now

Nokia does not only make phones.

Nokia´s feature-phone division is doing well, because of Asha phones.

Nokia has not lost about 1 billion dollars a quarter like the media says, because Nokia has 5 business parts and 4 of them are profitable. Therefore, the exact number is much much smaller.

Nokia´s loss is only 17 million euros any more (compared to Reuters´s consensus 277 million and Nokia´s last two previous quarters about 290 million each), this was much better.

Nokia Siemens Networks is doing very strongly (over 300 million euros profit in 3Q. More business to come in the future: 3G in developing countries, 4G in developed and emerging countries)

NAVTEQ was also profitable, NAVTEQ´s number might be better in 4Q, because of the deals with Amazon, Yahoo, Oracle and many car-companies.

Nokia´s patent portfolio earns about 500 million euros a year, and the number is still increasing.

Nokia has cut expenses (which saves about 1 billion euros a year) and in the future Nokia does not have to spend so much in R&D either, because it has teamed up with Microsoft.

Nokia´s WP 8 devices will hit more markets, for example the Middle-East countries (Lumia phones have not been in these countries yet till now).

New Lumia generation looks promising.

For example Lumia 920 has features, such as:

Floating-lens PureView camera with optical image stabilization

Wireless charging

Super sensitive and bright screen that can be used with gloves or finger nails

Premium GPS that can be used also offline

Augmented reality City Lens

Free music with no advertisements

NFC

Lumia 920 does not only have a great low-light camera, but also has exceptional audio recording quality due to the 3 HAAC Rich-recording microphones.

Right now, there is no way to compare Nokia to Apple among most smart phone consumers, but there is hope in the future.

For example, Nokia just signed the contract with China Mobile (who has about 660 million subscribers, which is about 70% of all subscribers in this world´s biggest nation), and even though iPhone is very popular in the US and Europe, Windows Phone OS already surpasses iOS in the world´s biggest countries beside China, such as Brasil, India and Russia. Even though in these countries more low price point phones are sold, but these are the most important emerging giants in the world where Nokia´s position and brand are still quite strong. And it may be sooner than we think when more people in these countries are able to afford high end smart phones.

Nokia has not lost about 1 billion dollars a quarter as the media says, because its other parts of business are profitable (while 1Q´s and 2Q´s total loss 290 million each, 3Q´s total loss only 17 million euros any more). Therefore, 3.6 billion euros net cash should be enough for Nokia´s transition period before WP8 phones take off. There is still enough room for a third ecosystem in this world, beside emerging markets Europe has adopted WP phones in a very encouraging way (for example Italy has already over 10% market share for WP phones, considering the Lumia debut has not been a year yet, since last November only. WP OS has already grown a lot faster compared to iOS and Android in their first quarters). Lumias were sold 9,9 million units under a year. The number is small compared to Iphones and Androids sold today, but it is not a bad start. It is more fair to compare the numbers among the 3 in their first year.

Now when the DOWS and S&P have almost hit all time highs, investors start to think more about cheap and potential value stocks. Usually NYSE stocks are on an average about 2x book value, NOK is now a lot below this (Apple about 5x book value). Therefore, I think NOK is cheap enough for its values. Another reason is NOK has been already shorted massively about 19% of its total shares.

Apart from Vertu and so on, Nokia still can sell its patents, since it still has about 30 000 patents in its own hands (in case Nokia needs more cash).

If the stock price still goes cheaper and cheaper, one day some rival would bid for Nokia, just for its patents ( Motorola was acquired by Google with 12 billion dollars, this is good to remind people who underestimate intellectual properties´ value).

Microsoft will bid for Nokia with higher premium if some company really bids for Nokia, because Nokia is in so close partnership with Microsoft that this also includes business strategies, business secrets and so on. Therefore, Microsoft won´t let any company acquire Nokia than itself. When it comes to Microsoft, it is still the net cash king in the world, after all its debts excluded, it still has a huge net cash about 50 billion dollars.

About Nokia´s buy out: Motorola´s patents were worth about 5.5 billion, if some company bids for Nokia´s patents and Microsoft still does not acquire Nokia, Nokia will be sold in parts. Nokia has 5 business parts, therefore patent portfolio is only 1 out of 5. Now, you can count yourself how much are Nokia Siemens Networks, NAVTEQ, and feature-phone division worth.

I know US is very important market, because Wall Street and US consumer trend give directions to market momentum around the world, still you can not neglect the power of BRIC and MIST these days.

You can calculate yourself how many people living in these 8 BRIC- and MIST-countries. In these countries, in Brazil, Russia, India, China, Mexico, Indonesia and Turkey, Nokia´s position and brand are still quite strong (except South-Korea, but you know it is Samsung´s home-country and the smallest country among those important 8 anyway).

Morningstar´s analysis about Nokia:

Estimated price: intellectual properties over 1 euro per share; other business parts (smartphones, featurephones, NSN) at least over 1.50 euro per share.

And NAVTEQ´s price not included (Nokia bought NAVTEQ with 5.7 billion euro). All in all, even in this case, Nokia share price would be at least over 2.50 euro, excluded NAVTEQ! And Nokia´s net cash is now 3.6 billion euros.

In other words, the sum of parts of Nokia and net cash are worth much more than its market cap now, which means NOK share is right now heavily undervalued.

Nokia also announced it is hiring more employees to work in Chicago (where NAVTEQ is). Who says Nokia is going bankrupt? Think twice before saying that!

Nokia also bought Scalado, the imaging technology firm in Sweden. Therefore, apart from NAVTEQ and NSN, Nokia is no doubt going big with PureView imaging technology. Some authors compare Nokia to Eastman-Kodak, I think it is almost the opposite.

Eastman-Kodak was the old era and Nokia is starting the new evolution with smart-phone imaging, when consumers won´t have to carry another gadget (camera) during traveling.

One of the reasons why Nokia is one of the most defensive stocks right now during bear markets is that Nokia has been already shorted massively about 19% of its total shares (while Apple only about 0.5%, Samsung over 2%, and other telecom companies about 4% in general).

By the way, NAVTEQ just reported it is making navigators into 4 out of 5 cars (80%).

And I hope Nokia will license City Lens to tablet makers like Amazon, Asus, Acer etc (at the same time it can turn Google maps users into using Nokia´s advanced mapping platform) soon.

When also Nokia´s Devices & Services division is profitable as well, will you ever have a chance to buy NOK stock this cheap again? The answer might be: NEVER.

Another aspect is, when now NOK has been already shorted massively about 19% of its total shares, bears could not go any further, because the share number that is available for borrowing/renting has already hit record high.

If bears still dare to sell, there are plenty of happy buyers out there, for example Switzerland´s central bank has announced it had bought more NOK shares and has become the 5th biggest shareholder in Nokia.

Considering now the total loss is about 17 million euros, it got much better from the 290 million (2 prior quarters each) loss.

3.6 billion euros net cash should be enough for Nokia´s transitional period before WP8 phones take off.

Nokia is also getting more cash from convertible bonds and selling its HQ and other non-core assets.

Nokia is a big chance and good bargain at over 4 dollars, because Nokia Siemens Networks has grown so strongly and profitable that Nokia and Siemens have decided to make it independent in these couple of years. That means Nokia shareholders will have two companies´ shares in their hands.This is a bonus.

The conclusion is Nokia is for long-term and medium-term investing not for short term. Just think about this, even when Apple and Google reach 1000 dollars, that is not even doubling, but in the long term Nokia has the opportunity to triple or even more.

Nokia Lumia 920 And Nokia Lumia 820 Available In Singapore and Malaysia From December 8th.

Nokia is also selling the following accessories in Singapore:

JBL PowerUp Wireless Charging Speaker for Nokia

JBL PlayUp Portable Wireless Speaker for Nokia

Nokia Purity Pro Wireless Stereo Headset by Monster

Netherlands, Device Availability From Jan 2013.

Microsoft announced 40 million Windows 8 licenses sold in 30 days.

Swedish online store calls demand for the Nokia Lumia 920 “absolutely huge”, causes a backlog twice as big as that for the Samsung Galaxy S 3.

Nokia Lumia 920 “Extremely Popular” At Walmart.

Walmart is running a great offer for smartphones in their online store. They are offering a free $100 Walmart gift card with every smartphone purchase. You can see the list of eligible devices here. Nokia Lumia 920 is listed there in all colors and it is available for just $69.99 with free gift card.

Hot deal in UK offers Pay as You Go Nokia Lumia 920 on EE for only £399, locked to EE/ Orange.

Nokia Lumia 920 is now available in Sweden from online retailer Phone House. The device is available in all colors and is expected to be delivered on November 29th. You can buy the device on contract from all the major carriers in Sweden such as Three, Telia, Tele2, Telenor and also Halebop. If you want an unlocked device with no contract, you can get it for 5790 svenska kronor(670 Euros).

Finnish Carrie: Demand for Nokia Lumia 920 is the highest for any Nokia phone in the last 10 years.

DNA Store’s Managing Director Sami Aavikko have told a local magazine in an interview that the demand for Nokia Lumia 920 in its stores were highest for any Nokia model released in the past 10 years. He also revealed that they are selling out of the devices as they receive.

The issue is not just due to short supply, with Sami saying quantities delivered were similar as for the iPhone 5, but that shortages was due to true demand.

Verkkokauppa sent a Lumia 920 into space attached to a balloon. The Windows Phone managed to achieve a height of 30km, spending more than 27 minutes in sub-zero temperatures. And it survived well after landing back to the earth.

It is now called “space version” Lumia 920.

Nokia Lumia 920 takes on a DSLR with night photography. Keng Chang, took the issue to task and compared his Canon 1DX DSLR to the Lumia 920. The results do speak highly of the Lumia 920′s low light performance.

Lumia 920 available at Telstra stores in Australia, but sold out.

The 920 on Rogers are not SIM unlocked though you could pay the Canadian carrier $50 to do so (assuming you bought it under contract).

Microsoft in talks with landlords – Set to push Microsoft Stores to Europe in 2013.

Because Nokia and Microsoft have other business divisions than just smartphones!

Nokia has NSN, Navteq, feature phones and patent portfolio.

And these 4 other parts of its business have been profitable.

Feature phones Asha 205 and Asha 206 belong to Nokia´s “next billion people to reach internet” strategy. This is a big chance. There are still many many people out there using feature phones, especially in developing countries.

In these phones, there are Facebook, Twitter etc, and also 40 most popular games in the world for free. All packed in a $60 phone without any contract. Therefore, I think it is quite hard for other manufacturers to compete featurephones with Nokia.

And the featurephone division in Nokia has been profitable, because of this Asha family. Therefore, Nokia´s 3.6 billion euros net cash, plus NSN, Navteq, patent portfolio and featurephones (all these 4 divisions have been profitable) are giving enough time for Lumia phones to take off (pushing them with huge marketings, discounts and campaigns). And Nokia´s EPS was -0.07 euro any more last quarter, when Lumias were sold 2.9 million units. And now, even Street estimation is above 5 million units. Kantar just reported WP phones have reached 11.7% in Italy. The WP phones most sold there are Lumia 610 and Lumia 800.

Yahoo-China reported last week that Lumia 920 alone was ordered from Nokia up to date 2.5 million units. And Lumia 920 still sells out

in most of the countries launched. Lumia 920 and 820 also support Arabic now, which meas WP8 phones will arrive to more markets.

In addition, China Mobile (the world´s biggest carrier with about 660 million subscribers) is selling Lumia 920T soon, starting December!

Lumia 920 has repeatedly sold out in many countries, such as:

Italy, Germany, Australia, US, UAE and so on. Two days ago, this also happened in France, Sweden and England.

Dutch Nokia Lumia 920 confirmed as pre-orders match or exceed that of the iPhone 5.

Dutch retailers have confirmed that there is real excitement about the Nokia Lumia 920 coming to the Netherlands.

Clove UK sells out of all Lumia 920 colours for the second time, even before shipments arrive.

In Hong Kong, the first lot of Lumia 920 sold out so quickly, and many consumers were even willing to buy the phone from others who could get the phone during launch with higher price, up to over 800 US dollars (the phone was sold only over 600 US dollars in Hong Kong).

Wireless Chargers for the Nokia Lumia 920 now showing up in Red Espresso coffee shops in Russia and in Beijing Airport´s VIP lounges.

While many stores such as Amazon (AMZN) and Best Buy (BBY) seem to be out of Lumia 920s, and Nokia is having trouble with supplying sample phones to journalists for them to review and write about, the company keeps its silence about the issue. When companies remain silent, speculationsgets going. When Nokia launched Lumia 900, it was initially launched in only a few select countries. On the other hand, Lumia 920 was launched in more than 20 countries simultaneously, and it is possible for many stores to have thin supplies of the phone in the first place.

Danske Bank Markets’s Ilkka Rauvola mentioned that his channel checks indicated some component supply issues. However, he raised his estimate of the number of Windows 8 based Nokia devices to be sold from 23 million to 36 million for 2013. Mr. Rauvola also changed his rating on Nokia from Sell to Buy, suggesting a price target around $3.80. Deutsche Bank’s Kai Korschelt and Johannes Schaller also agreed that Nokia was experiencing supply issues and they identified the supply issues as the main culprit for the stock issues. Unlike Mr. Rauvola, Mr. Koschelt and Mr. Schaller don’t seem to believe that there is a high demand for the new line of Lumia phones. In fact, Deutsche Bank’s analysts don’t even think the company can sell as many as 30 million Lumia phones in 2013, and their estimated number sits around 23 million. Another industry analyst, Tero Kuittinen, suggested that Nokia probably sent most of its supplies to Europe instead of North America, because the company’s products usually see much stronger demand in Europe than North America. In that case, the shortages in countries like Germany, Italy and France must be due to strong demand while the shortages in the US must be due to low supply.

If the issue is based on low supplies alone, this is a big mess from Nokia’s management. Having short supplies of this Lumia 920 would be a big mess because Nokia’s very existence relies on this phone at the moment. Why would a company put all its eggs in one basket and still not have enough eggs to feed itself? I don’t think Nokia’s management would make such a big mistake. Yes, Nokia’s management isn’t the best when it comes to marketing, but the company is pretty good when it comes to building and distributing phones. That is unless there is a serious problem in the supply chain where Nokia doesn’t have much control.

Michael Walkley at Canaccord Genuity performed his own channel-checks in the USA, and he found out that while there are some supply issues with the phone, the demand for the phone has also been pretty strong. Mr. Walkley’s channel checks indicated that Lumia 920 was the best selling Windows Phone and third best selling phone overall at AT&T stores. This is pretty encouraging for investors of Nokia.

Amazon currently sells Lumia 920s for $69 when one agrees to sign a 2-year contract with AT&T. In the phone’s page, the review of the users is overwhelmingly positive. The phone’s average score is 4.7 out of 5.0, which is the highest average score I’ve ever seen in Amazon for a phone. Prior to Lumia 920′s arrival, the users assigned an average score of 4.6 for Lumia 900. In comparison, Apple’s iPhone 5′s average score is 3.7 and Samsung’s Galaxy s3′s average score is 3.9 at the moment.

Of course, for the time being, one shouldn’t expect Nokia to sell its Lumia 920 in numbers similar to Samsung’s Galaxy S3 or Apple’s iPhone 5. Those phones will sell more copies in a quarter than Lumia 920 will sell in a year, but this is not all bad. Nokia’s current market value is about $15 billion whereas Apple’s market value is over $500 billion. Basically, Nokia can sell way fewer copies of its flagship phone than Apple, and this can still be bullish for the company. J. S.

One way or another, this quarter is no doubt going be a lot better than last quarter in smartphones.

All Lumias were sold only 2.9 million units last quarter.

Yahoo-China reported last week that Lumia 920 alone was ordered from Nokia up to date 2.5 million units. And Lumia 920 still sells out

in most of the countries launched. Lumia 920 and 820 also support Arabic now, which meas WP8 phones will arrive to more markets.

In addition, China Mobile (the world´s biggest carrier with about 660 million subscribers) is selling Lumia 920T soon, starting December!

The only 1 out of 5 Nokia´s business parts, which is not profitable, is smartphone business, till now. And the EPS in last quarter (3Q12) was only -0.07 euro per share any more.

Nokia´s current 3.6 billion euros net cash should be enough for Nokia´s transitional period before WP8 phones take off.

Nokia is also getting more cash from convertible bonds and selling its headquarters and other non-core assets.

Morningstar´s estimated price for the whole Nokia:

Intellectual properties over 1 euro per share; other business parts (smartphones, featurephones, NSN) at least over 1.50 euro per share. And NAVTEQ´s price not included (Nokia bought NAVTEQ with 5.7 billion euro). All in all, even in this case, Nokia share price would be at least over 2.50 euro, excluded NAVTEQ! And Nokia´s net cash is now 3.6 billion euros.

In other words, the sum of parts of Nokia and net cash are worth much more than its market cap now, which means NOK share is right now heavily undervalued!

Right now, the stock is at this price (no tech stocks usually this cheap with valuations), just because the stock has been beaten down and short sold extremely heavily around 20% of the company´s total share number (New York + Helsinki).

When and if Nokia reports profit, will one have a chance to buy the stock at this price anymore, the answer might be NEVER!

Now, many authors start to write how much the stock has jumped, but they might have forgotten the realizing of the whole picture scale. Only one and a half year ago, Nokia was still around $10.

And keep in mind, the stock went down like this, just because of the bearish idea that the company would have gone bankrupt. Without that NOK would have never been this cheap.

Also remember that Nokia has beaten estimations and expectations in the last two quarters (in 3Q the EPS was -0.07 euro per share any more, while the consensus was -0.11 euro per share), that is why the stock is now over $4, it is not just due to the recent positive news alone.

It is worth to keep in mind that the stock is undervalued right now.

Nokia has “low end competitive Asha phones and high end competitive Lumia phones”, that is why I trust in Nokia´s phone business into the future. Apart from that, one of the reasons why I chose NOK, is because Nokia has other business units like Navteq, NSN and intellectual property rights.

Clove UK has completely sold out Lumia 920. EE still has supply. EE-exclusivity ends January, so also other carriers in UK will sell the phone.

Lumia 920 AT&T back at Amazon US, supply just arrived.

Lumia 920 and Lumia 820 are arriving India in January.

Lumia 620 (the most affordable WP8 phone up to date) is available in many markets starting the end of January, including China and India.

Lumia 800 at number 1 in Amazon UK.

Lumia 800 and Lumia 610 in UK top ten chart.

Nokia has brought a new app called “Nearby” into Asha phone line. “Nearby” is almost the same as Lumia´s City Lens, which is one of the most advanced, useful and unique features in Nokia Lumia phones. It has location data, such as restaurants, hotels, hospitals, shops, sight-seeing places etc, and also voice guided navigation how to go there by walking, by car or by public transport.

Right now, the stock is at this price (no tech stocks usually this cheap with valuations), just because the stock has been beaten down and short sold extremely heavily around 20% of the company´s total share number (New York + Helsinki).

When and if Nokia reports profit, will one have a chance to buy the stock at this price anymore, the answer might be NEVER!

Now, many authors start to write how much the stock has jumped, but they might have forgotten the realizing of the whole picture scale. Only one and a half year ago, Nokia was still around $10.

And keep in mind, the stock went down like this, just because of the bearish idea that the company would have gone bankrupt. Without that NOK would have never been this cheap.

Also remember that Nokia has beaten estimations and expectations in the last two quarters (in 3Q the EPS was -0.07 euro per share any more, while the consensus was -0.11 euro per share), that is why the stock is now over $4, it is not just due to the recent positive news alone.

It is worth to keep in mind that the stock is undervalued right now.

Nokia has “low end competitive Asha phones and high end competitive Lumia phones”, that is why I trust in Nokia´s phone business into the future. Apart from that, one of the reasons why I chose NOK, is because Nokia has other business units like Navteq, NSN and intellectual property rights.

Business men and women like the Lumia 920T in China, because of Office, good maps and location data City Lens and GPS, and good virus protection firmware built in the phone.

Clove UK has completely sold out Lumia 920. EE still has supply. EE-exclusivity ends January, so also other carriers in UK will sell the phone.

Lumia 920 AT&T back at Amazon US, supply just arrived.

Lumia 920 and Lumia 820 are arriving India in January.

Lumia 620 (the most affordable WP8 phone up to date) is available in many markets starting the end of January, including China and India.

Lumia 800 at number 1 in Amazon UK.

Lumia 800 and Lumia 610 in UK top ten chart.

Nokia has brought a new app called “Nearby” into Asha phone line. “Nearby” is almost the same as Lumia´s City Lens, which is one of the most advanced, useful and unique features in Nokia Lumia phones. It has location data, such as restaurants, hotels, hospitals, shops, sight-seeing places etc, and also voice guided navigation how to go there by walking, by car or by public transport.

The Independent UK calls the Nokia Lumia 920 “the most advanced smartphone on the market”.

Beside Verizon news, which is of course very important for North America markets and Wall Street, for example in China regarding Gartner´s report, WP phone sell is going to pass 10 million units worldwide this quarter alone. In Finland, with national TV interview, even though CEO Stephen Elop did not say how many units of Lumia 920 have been sold, but he thanked shareholders and people who have supported Nokia through difficult times. He also said all the hard work has been worth it and the company is starting to see ray of light and the effort has been now fruitful.

According to China site, the Nokia factory in Beijing alone is producing about 600 000 units of Lumia 920 a month (Nokia has several factories, so we don´t know if Nokia is producing Lumia 920 in other factories or not, but this Beijing factory also produces other Lumia phones, and the production in this factory alone is about 2 million Lumia phones a month.)

Then there is also a piece of news that Nokia will launch a tablet next year at MWC. In addition to positive Lumia 920 news, Nokia´s Asha phones are said to be ones of the hottest Christmas presents this year for kids in many countries.

At this price, NOK is undervalued.

Morningstar´s analysis about Nokia:

Estimated price: intellectual properties over 1 euro per share (Motorola´s patent portfolio was worth about $5.5 billion); other business parts (smartphones, featurephones, NSN) at least over 1.50 euro per share.

And NAVTEQ´s price not included (Nokia bought NAVTEQ with 5.7 billion euro). All in all, even in this case, Nokia share price would be at least over 2.50 euro, excluded NAVTEQ! And Nokia´s net cash is now 3.6 billion euros.

In other words, the sum of parts of Nokia and net cash are worth much more than its market cap now, which means NOK share is right now heavily undervalued.

Nokia Is Still Extremely Cheap

The company has since partially offset these fears with excellent cash management, restructuring aimed at reducing costs, and more recently, its better than expected 3rd quarter results. The company achieved operational profitability (1.1% non-IFRS) with better than expected revenues, triggering a 20% increase in stock price. As the table below shows, these factors have enabled Nokia to maintain a healthy interest coverage ratio and quick ratio (nearly equal to the industry average), dispensing any immediate liquidity concerns.

Company

Industry

Sector

Quick Ratio (MRQ)

1.16

1.62

1.64

Current Ratio (MRQ)

1.28

1.96

3.01

LT Debt to Equity (MRQ)

48.76

22.29

10.61

Total Debt to Equity (MRQ)

66.45

39.67

19.69

Interest Coverage (TTM)

4.9

4.91

164.78

Figure 1: Financial Strength/ Reuters

Valuation

Nokia is currently operating at a loss and the sell side expects the company to become profitable, somewhere in 2014. The stock is very volatile, as can be assessed from the 100% run in the last 6 months. I believe Nokia’s share price will continue to fluctuate with short term catalysts and it’s still pointless to value the stock on 2014 earnings given the uncertainty. Instead, investors should value the company on a worst case scenario. I believe at this point, Nokia’s biggest assets are its impressive patent portfolio, Cash, NSN and Navtaq.

I have used three recent patent sales to get an approximate value per share for Nokia’s current patent portfolio.

$ millions

AOL (AOL) Patent Sale

Vringo (VRNG) Purchase

Nortel Networks

No. of Patents Sold

800

500

6000

Sales Value

1100

22

4500

Price Paid Per Patent

1.4

0.0

0.8

No Nokia Patents

9500

9500

9500

Patent Portfolio Value

13063

418

7125

Shares Outstanding

3830

3830

3830

Per Share ($)

3.4

0.1

1.9

Average Price Per Patent

0.79

Average Patent Portfolio Value

7316

Average Per Share Value ($)

1.91

Figure 2: NOK Source: Google Finance

As the calculations show, the patent value per share of Nokia’s patents comes down to $1.91 per share. According to Nokia’s disclosures, the company ended Q3 with gross cash of $11.5 billion (EUR 8.8 billion). The Q3 results also indicated that Nokia had EUR 288 in currently maturing debt and EUR 1.1 billion in short term borrowing. Deducting other liabilities, we arrive at a net cash position of $4.7 billion (EUR 3.6 billion). This comes down to a per share amount of $1.22, and adding the per share patent value of $1.91, the value of cash and patents together is $3.13.

Bottom Line

Nokia still trades way below its salvage value. The company’s patents and net cash, alone are worth $3.13 per share. This of course does not include Nokia’s Navtaq business and NSN (Nokia Siemens Network). These divisions continue to be profitable, despite problems of Nokia’s smartphone division. In Q3 NSN sales were EUR 3.5 billion and operating profit was EUR 323 million; the operating profit of location and commerce segment was EUR 37 million. The combined value of Navtaq (3x sales for $3 billion) and NSN (0.5x sales for $7 billion) is around $10 billion ($2.6 per share). This gives us an approximate per share value of $5 for NOK. Therefore, Nokia is still trading at a discount to its salvage value and is an excellent value opportunity. M.S./SmartEquity

And why is NOK still so cheap?

Because the stock has been over sold.

Nokia is the most short sold stock in both Helsinki and New York!

NOK short interest:

NYSE November 30

295,118,232 shares

Helsinki December 6

10.7% (with investors over 0.5%, below 0.5% not listed)

Nokia´s total share number (approximately 3.75 billion shares) covers both New York and Helsinki.

To me these kinds of comments are more informative and appreciative than some articles written on investing sites, and are smarter than some empty titles like “Sell Nokia against the grain!”, “Nokia stands for not OKAY” or “You need to sell Nokia now!” or “Nokia is IN, buy Nokia now!”. Those are really not wise at all, because they don´t have the good backings up to their claims. It almost sounds like casino gambling or children´s talk.